So how is the virus affecting the U.S. economy and, more specifically, the Arizona housing market? For one, the Dow Jones Industrial Average is down, hovering around 26,000 points. That’s equivalent to where it was in August 2019.
Generally, the US economy has taken a little bit of a step back. To combat this, the Federal Reserve has recently reduced the Fed Funds Rate by half a point. In turn, that will trickle down into housing mortgage rates.
Borrowers are seeing a refinance boom across the country. According to Fannie Mae, rates are near an all-time low for 30-year fixed-rate mortgages. That is phenomenal news for homebuyers, as well as homeowners who are looking to refinance.
If you’re looking to sell, you’re in luck—inventory is tight, and because rates went down, borrowers’ buying power went up. That means there’s an even higher likelihood that you can get top dollar (or more) for your house.
Let me put this into perspective.
If you were at 5% on your mortgage and you borrowed $400,000, your principal and interest payment would be $2,147 a month. If your rate dropped by just 1%, your monthly payment would drop to $1,909, saving you $238 per month. That’s $2,859 a year! At 4%, you could borrow almost $50,000 more to get the same payment as you would have at 5%.
This would benefit both buyers and sellers. Sellers could get more money for their homes because supply is low and demand is high, in addition to the fact that buyers have increased spending power.
This is where the coronavirus has left the market so far. We’ll continue to watch it over the next several weeks and months to keep you updated.
Stay safe out there! If you have any questions about the market or the virus’s impact on it, don’t hesitate to reach out to us. We’d be glad to hear from you.